Benefit To US Economy From Deadbeat Squatters: $50 Billion Per Year

About a year ago, Zero Hedge first floated the then apocryphal idea that the economy is receiving an implicit boost from the money "saved" by squatters: people who no longer pay their mortgage, but due to banks' unwillingness to have a price discovery event on the home (in the form of an auction on REO or foreclosed properties) which would force mark bank assets far lower (due to impairments on the mortgage as opposed to it merely being in "Special Servicing" status), continue to reside in the property. Furthermore we disclosed yesterday, per LPS the average delinquency period is now 573 days meaning the typical deadbeat resides in their home for over a year and a half without paying a single cent. And since there are millions of delinquent mortgages, all this adds up to a lot of money. How much? Well, nobody had been quite able to quantify this huge boost to the economy, which is why the topic never received prominent media notice. Until now. In "Rental income and "Squatter's Rent" JP Morgan's Michael Feroli kills two disinformation birds with one client note: first he debunks all myths that "rental income" is surging, as was reported in glaring headlines in a variety of propaganda media outlets following Monday's personal income report was released. This is patently false. As Feroli explains: "This rise has little to do with landlords getting more from their tenants. In fact, it has very little to do with what speakers of the English language would normally consider "rent." Instead, it mostly reflects mortgage payments of the household sector coming down, in part because of the aggregate decline in household mortgage debt due to net cancellation of mortgages associated with foreclosures." In other words, surging rental income is nothing more than "squatter's rent" saved by not paying one's mortgage. As to quantifying this amount - per Ferroli until recently it was $60 billion a year! This is a stunning 0.5% of GDP. Luckily there is good news: this unethical and artificial "boost" to the economy is finally declining... and is now only $50 billion on an annualized basis.

We will not debate the ethics of this phenomenon. That a typical homeowner can walk away from their mortgage is perfectly normal. After all there is a trade off - a wipe out of one's equity investment (if any), as well as a dramatic impact to one's credit rating. On the other hand continuing to live rent and mortgage free in a squatted property is a different issue altogether. Whether this is to take advantage of a bank's own greed and stupidity is irrelevant: this is capital transfer. And considering that banks continue to be woefully undercapitalized, and one Mark to Market resumption away from total insolvency, the money that one deadbeat squatter is "saving" today, is money that all other taxpayers will have to make up tomorrow when the lender bank blows up at any given point in the future. Yet the enforcement of this process is the bank's prerogative, and there is little that can be done unless a lender is actively pursuing the expulsion of a squatter. But why should they - this process begins an involuntary Mark To Market process on the underlying mortgage which will have a far greater cost than benefit from letting the status quo persist.

In the meantime, said "squatter" benefits by not having the biggest consumption outlay typical for a US individual: residential costs, whether mortgage or rent. In essence what this does is to raise the effective wage of all the squatter households, by some estimates over 10 million of them. Which should force all those who believe there is no real inflationary pressure due to no real increase in wages to re-evaluate their thesis.

The one saving grace is that sooner or later the bank has no choice but to pursue foreclosure actions. Usually this occurs about two years in a mortgage's transition to delinquent. In the meantime the one beneficiary is the US economy, as these same deadbeats go out and buy iPads, consumer products and other non-credit intensive products (by now their credit rating is shot explaining why there is an inflation in necessary products (and iPads) and deflation in everything else). Of course by doing so they make life for everyone else far more complicated, as being perfectly elastic to staples' prices forces those foolishly who still pay their rent and mortgage to pay a greater proportion of their income on items that would otherwise cost less if demand was more elastic. This is yet another externality for the banks, which love nothing more than inflation. The only loser is as always the law-abiding, ethical, taxpayer.

As to the total benefit to the economy from this borderline illegal process: it now amounts to about $50 billion a year. Per JPM: "squatter's rent increased to over a $60 billion annual rate early last year, but with delinquencies declining that has come down recently to just over $50 billion." In other words, the ongoing ability to engage in "squatting" has a comparable impact on the economy as the most recent overhyped fiscal stimulus.

The question then becomes what happens when this ultra-stealthy and highly unethical stimulus goes away? $50 billion today, $40 billion tomorrow, and so forth. In the meantime, inflation will continue due to the abovementioned effect this phenomenon has on real wages, albeit in proportionately smaller doses. And how long before those who dutifully pay their mortgages say enough, or worse yet, turn against that deadbeat(s) in their neighborhood?

Luckily for Bernanke, this process will come to a head long after the Chairsatan, who through his policies is allowing this to take place in the first place, will be long gone on a non-extradition beach, collecting 20%.

Everyone else, however, will still be stuck here.

Full must read Feroli note.

Rental income and "squatter's rent"

Rental income has been soaring. In yesterday’s February personal income report, rental income of persons increased 2.6% on the month to $326 billion. After bottoming at $120 billion in February of 2007, rental income has nearly tripled in the subsequent four years. Even though rental income accounts for less than 3% of personal income, over the past four years it has accounted for over 16% of personal income growth. This rise has little to do with landlords getting more from their tenants. In fact, it has very little to do with what speakers of the English language would normally consider "rent." Instead, it mostly reflects mortgage payments of the household sector coming down, in part because of the aggregate decline in household mortgage debt due to net cancellation of mortgages associated with foreclosures. In this sense, some of this rise in aggregate rental income is related to what some have called "squatter's rent" -- the monetary benefit to the household sector from not staying current on their mortgage obligations -- though most squatter's rent is outside the official data. With delinquencies coming down, rental income should see slower growth in the future.

(Warning: the rest of this note gets a little wonky) About a quarter of rental income is what one would normally consider rent -- the income received by one person from another person to use a dwelling. The other three-quarters, however, is "owner-occupied rent." In one of the odder quirks of national income accounting, the BEA assumes that homeowners are essentially landlords who rent to themselves. (This adjustment insures that the measured output of housing services is invariant as to whether dwellings are owned or rented). Rental income for these owner-occupiers is this gross imputed rent less the costs associated with homeownership, and the largest such cost is mortgage interest. Gross rent has been gradually trending upward, but cannot account for the surge in rental income. Instead, mortgage payments have fallen off relative to trend, boosting measured rental income.

Mortgage interest payments decline when either the interest rate or the debt outstanding declines. In practice, most of the reduction in mortgage interest has been due to lower mortgage balances, and much of the reduction in mortgage balances has been delinquent loans having been foreclosed upon. In the official data, mortgage obligations are only removed from homeowners' balance sheet when the debt has been charged-off. At that point, of course, many homeowners would have been kicked out of their former residence. Generally, whoever buys the foreclosed-upon property takes on less mortgage debt, mostly because foreclosed properties tend to trade for significantly less than properties that have not been in distress. The lower debt and mortgage payments results in higher imputed rental income. The net reduction in mortgage debt due to foreclosures over the past few years could be around a half trillion dollars. This implies about a $30 billion decline in mortgage payments -- which is about $100 billion below the previous trend in mortgage payments -- and a corresponding boost to rental income.

When folks talk about "squatter's rent" they generally refer to the funds that delinquent mortgagers save by not staying current on their obligations: funds that, to the extent they are available, could be used for other purposes such as consumer spending. This phenomenon will not be captured in the official rental income data because mortgage debt is not expunged from the household balance sheet until it is charged-off by the mortgagee. (This is in keeping with international statistical conventions.) For some purposes, however, it may be helpful to look at households on a cash-flow basis, in which case disposable income would include the interest expense saved through delinquent (but not foreclosed-upon) mortgages. This measure of squatter's rent increased to over a $60 billion annual rate early last year, but with delinquencies declining that has come down recently to just over $50 billion.

there are plenty of beds at homeless shelters. I am not aware of any right in the constitution to keep something that no longer belongs to you because you won't follow your contract obligations. Kick the fuckers out now.

Who should toss them out? The banks that own the mortgages? They could, but they don't want to, because they don't want to mark their "assets" to market. This is the same as property abandonment, and in just a few more years, those homes will belong to the squatters under common law, same as if they were homesteaders.

If the banks don't want the property to the point that they abandon it, why shouldn't anyone else just take it?

[If the banks don't want the property to the point that they abandon it, why shouldn't anyone else just take it?]---tmosley

Who's the real owner of the house? The title or note holder---the unsuspecting group of MBS investors who paid money for these criminally rated AAA securities. As we know, the servicing bank does not own the title/note and therefore has no legal ground to issue foreclosure notices.

(Now, how do the note holders get back their collateral, their piece of the house? That's a good question. Gonna take some imagination. Like, maybe the servicing banks and ratings agencies should be on the hook for paying off multi-note holders leaving in the end a one-person note holder. Then go from there.)

Thanks for your post, t.

EDIT: Then again, the banks are broke and the whole economy will fall like a house of cards anyway. The foreclosure fraud conundrum will be the last thing on people's minds before long.

I wonder if we will see changes proposed to common-law to eliminate the right of long term squatters to claim title. The morgage holder/servicers will not let property slip through thier hands, but the RE market is still very weak (excepting land, from what I can tell), and not getting better. A quiet removal of squatters-get-title laws would be just the ticket. for the mortgage holders, that is...

It is virtually impossible for adverse possession to arise out of permissory use of a property. Further, I'm nearly certain all of the notes allow for flexible remedial efforts on behalf of the party seeking to enforce, e.g. "a failure by the bank to enforce any default does not constitute a waiver or acceptance of default." There would have to be a break in the chain... as in you and your squatter neighbor, both being in the same boat, just decide to switch houses... live in them in the statutory length of time and file for quiet title... although, you may need color of title and/or to have paid taxes on it... depending on jurisdiction...

Don't forget that also, the "world has come to": the biggest crooks in American history being regularly fed through the organize theft of the people through state intervention and currency debasement. If the currency and mortgage itself is "deadbeat", can you accuse the victims of that mortgage of being "deadbeat" if they get back some of what was stolen from them through a system based on fraud in just about every way you could look at it?

An institution that exists though compulsion and force rather than through "consent of the governed", (to quote the Declaration of Independence), can be considered nothing but a criminal gang, and those who use its unjust powers for their benefit are the biggest of all "deadbeats". In fact, those types are quite busy "beating" otherwise living people on this planet into the "dead" and half-dead by the tens and hundreds of millions! The "beat" towards "death" goes on and will continue until we stop it.

Since this system is doomed, this "next time" let us clearly keep the voluntary nature of "consent" uppermost into the arrangement of society by always keeping "defense" and "justice" as services in a voluntary and free market, where the buyer remains sovereign and there is never any ambiguity again about the issue of "consent". All the criminal gangs on this planet that call themselves "governments" have a problem with that "consent" thing - they don't have it!

The big companies forced the taxpayers for money when they fell apart. We were forced to bail them out. Where would they all be if they didn't get that money? Add that to all the printed money being thrown into the market and into execs pockets every day.

That's the real crime, that's the real outrage. I really don't care if deadbeats don't pay their mortgage. These house will sit and rot otherwise and be torn down.

Give it a rest, sheep - he who complains has already lost. We had the opportunity to witness a complete take down of a well established nation-state. Yet, where is the (grudging) admiration or at least acknowledgement that the play was executed to the finest degree?

Save your outrage - revenge is best served cold. The only possible good that might arise out of this event are legal remedies "executed" by a new regime.

There are often two things; the things that should be and the way things are. These people probably stopped paying their mortgages fully expecting to be evicted from their homes, but did it because of economics. After enough time passed, and nothing happened, they probably thought, well, if they aren't going to kick me out then fuck it.

These banks have nobody to blame but themselves. They engaged in ponzinomics and continue to do so. They have the rules of the game changed so that they can continue to avoid reality. Is it fucked up that some people struggle to pay mortgages while others have not paid and aren't evicted? Sure, but things have gone so far beyond fucked up because the lawmakers have allowed it to be so. The people in the homes aren't squatting to thumb their noses at people who pay... they are doing what everyone would do.. trying to survive in a country where laws have no meaning anymore.

Some pay mortgages, some don't. Some pay taxes, half don't (including GE). Some work, some collect two years of unemployment, food stamps, medicare, etc... The government prints bonds, the FED prints money to buy the bonds. The whole system is screwed up so bad now that most people are so pissed off they don't know what to do.

The government and banksters have fucked the real estate market up for at least a decade (maybe more?), so for the 25% (and growing) of underwater homeowners with mortgages the pay, squat or walk decision will be weighing on them every passing day. This problem will continue to grow as property values continue to drop.

I am surprised the Banks have not yet colluded Treasury to treat the value of Squatter Rent & foreclosure deferral as a current financial benefit, as it would allow the Banks to write down the current lost interest against current profits, create a taxable event for the Squatters which Treasury would tax, and the Banks would still be able double dip on their post-foreclosure write downs and loss sharing agreements. They must be getting rusty.

And notice that the mega-banks aren't actually trying to repair their balance sheets for a return to genuine accounting, instead they keep shunting the cash out through bonuses to their families as if it were a foregone conclusion that either there will be no "tomorrow" or that there will be plenty more where that came from. What a joke! I am thinking their passports are all in order and they have their next move well prepared.

Heard an ad for a lawyer on the radio this morning for forclosure and tax advice. "If you have been given a 1099 from your bank for debt forgiveness and owe taxes, we can help you figure out your options."

The fact that debt forgiveness is taxable income supports the premise of the economic/GDP boost in TD's post.

maybe technically, but practically speaking, the IRS is no different than any other creditor (although probably more inefficient and needing more levels of interaction to speak to someone who knows their elbow from their asshole)... meaning, they too settle for pennies on the dollar... if you really are in financial hardship and can prove it.... further, there is a statute of limitations for collection... and I know of a couple clients who've run out the SoL period without jobs/income... the trick is to not have any assets (real property or titled personal property) to which they can attach a lien...

Yes, by not promptly foreclosing the banks benefit because if they did they would have to mark to market instead of mark to fantasy and that would make them insolvent and the servicers benefit from fees that are charged to their investors.

I walked away from a condo that I could no longer afford in Nov 2009. In Feb 2010 I notified the bank and condo association and had my attorney send the bank a quick claim deed so that they could have clear title. The condo association rented the unit and per my instructions, after they deduct their fees, sends the rent to the bank. The bank has continuously lost or disregarded my communications and faxes. When I sent them a quick claim deed the bank attorney went ballistic, probably because if the bank accepted it they and their attorney would loose the fees they charge to their investors for over well over a year and still counting. They have set a foreclosure date twice only to cancel them. I did not benefiting from walking away. I lost a sizeable down payment and my credit. If you call me a deadbeat what do you call the bank? Admittedly mine is a mild case, I feel sorry for veterans, homeowners who tried working with the banks and completely innocent people who are losing their homes due to bank and mortgage servicer fraud.

Haaaaaaa..... no one's goin' anywhere, bitchez. Possession is 9/10ths of the law. This is the retail side of extend and pretend and it will take a LONG time to work through the system. You know what to do: BTFD. Hugs and smoochies.

This is brilliant dot-connecting and it underscores why the residential RE market simply needs to clear...and it implies why certain, politically interested parties want to delay that as long as possible if not prevent it outright.

Sometimes it seems that ZH is more outraged by the fact that some delinquent home owners are being foreclosed on by banks that may (or obviously don't) have clear title to the in-arrears mortgage in question. I would argue (and have) that not letting the market clear will ultimately have far worse consequences, especially in light of the fact that almost no "fraudclosure" victims are even close to honoring the terms of their legal mortgage obligations.

the sooner the market clears the sooner we can get things going in the right direction. We need two million foreclosures a month until this damn thing is cleared. It will be good for the economy and the majority of people.

If some bank doesn't hold a good mortgage title, trace backwards to the last good mortgage title and let them forclose. If there is no good mortgage title maybe it should default to the appropriate state/county/town and let them foreclose instead - they could probably use the money. Those are the kinds of things that are supposed to happen when you don't follow the law. And giving banks yet another pass on their shitty, woe begotten assets is just flushing money down the drain anyway.

Cities/counties take deliquent properties to tax sale. You pay the taxes and get a tax lien which is senior to everything, including a morgage, and pays interest as well. At some point you can file for a deed and take possession if the lien is not discharged (taxes owed and all penalty interest). Something like that--it's been awhile.

Here's the law: don't steal, don't defraud, don't kill. If you are a "man" you agree, if you are a "beast" you disagree. Everything else you are calling "law" ceases to be "law" and becomes crime when the system that proclaims it is not based on voluntary CONSENT. No consent, no "just powers". Our system is not based on consent, and hasn't been at least since the time of the civil war and probably as early as the Constitution was "ratified", (presumably by some kind of "rats"), and unjust men started to use it to commit crimes.

Mercury, spot on. The process for determining the real holder is pretty simple and would only require the chain of assignment to pile into a single declaratory action... once the determination is made, the proper party forecloses and the debtor is basically SoL to defend himself (at least insofar as the proper party bringing the suit, as precedent has already been laid down). The problem though, is that the real holder can't be determined without running into securities law issues... the real property component is simple... the securities issues, not so much... Ideally, the securities get put back to their creators... and then mortgages put back until the first valid assignment. Once the home is sold, the proceeds are divided among the parties as they agree or as a court determines...

Not that simple really. With the creation of MERS to bypass costly title recordings and fees, another fraud was able to be created because the original "note" that the buyer signed was saved electronically and then destroyed. These electronic notes could be sold over and over to different investors and clustered into different MBSs or CDOs. Trying to ascertain who is the "real" note holder proves to be challenging at best.

Btw contrary to the MSM most loan defaulters made NO conscious decision to default. Clinton made home ownership almost a "right" and the govt did all that it could to subsidize this with ridiculous incentives and crazy low rates to make everyone a homeowner. Problems arose when the original "teaser" rates expired and became variable rates and the payments doubled or tripled. Meanwhile the variety of loans available all but disappeared due to the implosion caused by such unbelievable risky loans being written and wallstreeted into truly shitty non-performing packages.

At one time a buyer could buy a house with 100% financing and STATED (no documentation) income with a credit score of 600! A 600 credit score means within 2 years there is a 10% risk of default!!! They knew these loans would fail.

This was orchestrated as part of the largest land grab and financial enslavement the world has known. As the banks collapse and their assets are nationalized, who wins? He who controls the debt controls the man (world). Who controls the debt of the US?

Right, but if the assignment TO MERS was a nullity (for various reasons, a blank assignment being one), then whatever MERS did with the note is irrelevant... the real holder is somewhere back up the chain. Each case has to be taken on its own facts, so we're casting a broad brush here, but I'd venture to say a large portion of notes never even legally made it to MERS.

Further, the original assignment is of little consequence... the important part is getting all the dates to match on the assignments and notarizations and for them to be in the proper linear sequence ;) (hence how robosigning gets busted).

As long as the entire chain of assignment is a party to an action, I cannot fathom that a court would find no enforceable note/mortgage exists... that isn't the issue... the issue is that the wrong entity is trying to proclaim itself as the true holder... if all the possible holders are before the court, the court can pick one and move on... it's not that complicated. (who would be the adverse party to the action? The homeowner probably won't be anywhere near the action... in other words, only parties that have already privately agreed to split the proceeds of foreclosure sale would be in the court's ear... how do you propose that will turn out? Some type of sua sponte reversal? Fat chance).

This stuff isn't complicated... the problem is there is no will to do what is necessary because of the risk of putbacks and litigation from the securities side... catch 22...

Further, I have yet to be convinced that the persons taking out these loans had no idea what would occur or that they could not afford them... they took the money and ran and decided to worry about the whole payment thing when they got to that bridge... well, that's fine and dandy, but certainly not without its own moral turpitude. I think it took two (or a village) to tango on this one...

It's not a land grab... it's a real asset grab, however they may come... and it was always the inevitable conclusion of the wealth gap... because that wealth gap necessarily sows the seeds of the currency's demise and, thus, the necessity by those with wealth to convert their ethereal (fiat) currency holdings.

The big whine to me seems that the shyster deadbeats didn't get to steal as much as the other assholes... well, you can put those crocodile tears back in your reptile eyes.

No we should just throw away the rule of law and the foundations of western legal principle instead. remmeber the entire reason we are in the mess is because banks didn't folow the law regarding titles, or even securitizations, or even in giving out the loans. so yeah, we should just let them foreclose.

tell you what, give the people the houses then we don't have the clearing problem, insure depositors, let the banks fail, the bond holders take the haircuts, and the government steps in and runs the financial institutions essential services. that's what should happen.

How can someone foreclose if they can't prove they own the property. As usual you solution lets the banks off the hook. do you work for Geithner or the bernank?

The homeowner probably has clear title to the property. The question is whether a particular bank has clear title to the mortgage. If the bank that is trying to foreclose on a homeowner doesn't actually have clear title to the mortgage that doesn't mean that no one can legitimately claim clear title or that there is no last, good title at all (the title originated somewhere even if it was sold and re-sold) . And even if there isn't a good title anywhere there's plenty of precedent for unclaimed property (the mortgage title in this case) to default to the appropriate municipality or government authority.

You think theres social unrest now wait until Obama waves his wand and officially grants 100% home equity to mortgage deadbeats simply because they had the shit luck that their mortgage was sold to one the bad banks...while their neighbors, who still make mortgage payments every month to their still solvent community bank struggle with underemployment, debt, inflation and higher taxes.

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed."

No consent among those who respect life - liberty - and property, then no just powers and no legitimate "law"! Got it?

Theft through debasement of currency, do you consent? Those who understand do not!

Murder and theft through aggressive invasion and war to the betterment of the few, do you consent? Those who understand do not!

Global theft and murder though state to state corruption, blackmail, bribery, and murder with IMF/World Bank assistance and global corporate conquest, do you consent? Those who understand do not!

Winner take all political power via sham elections that steals from those without "power" to benefit those with the "power", do you consent? Those who understand do not!

False "consent" through deception, state brainwashing, and imposed taxation at the point of a gun, do you consent? Those who understand do not!

I could go on and on, but I ask you now, where is your "rule of law" based on "just powers" from consent?

Exactly...the banks bankrupt themselves (with a little help from Uncle Sugar), a gun is placed to the publics forehead to loot the public Treasury...and then, once again, the banks get to loan our own money to us all over again.

Until foreclosure-gate hit the news last fall, only about 10 percent of people contested their foreclosures. That number is now skyrocketing. Not to mention, some judges are looking at affidavits, assignments and other paperwork much closer. I expect that LPS delinquency average to go much higher before the county courts can clear their backlog.

The issue with ongoing and prospective foreclosures is this will just delay the inevitable... the worrisome lawsuits are the ones regarding past foreclosures where a fraud was committed on the court... just cut a check to the debtor and be done... tell them to go buy a new house with it.

Agreed buzz. The snarky comments are part of the flavor here. So much bias cheerleader "news" is passed off as journalism at practically every news outlet all serving an agenda. I have yet to see one story say stocks up due to bad news, world crisis, war, poverty and Pomo. All spin.

It could be written better. So long as these articles bend towards the sarcastic, they will not be meaningful on a larger stage, and I agree, the Durden(s) could teach journalism to the wanna-bes at corporate media. The MSM provides PR spin on everything these days.

A. Banks aren't your neighbors or your friends. B. The property is abandoned, and as such, is free for homesteading. Seven years after they start "squatting" without challenge from the mortgage holder, the land is theirs by common law. It's much the same as finding money on the street. You are legally obliged to notify the public of the find, and wait a certain amount of time for the owner to come forward, and then it is legally yours.

If things didn't work this way, then all physical cash and numerous objects of real value would litter the streets, and huge swaths of land would lie abandoned and mouldering, as one thing or another happens to the owners such that the property isn't sold before they die, etc.

Squatting is a dangerous game though. Any time during those first seven years the sheriff could show up and kick you out. That is the risk you take to get the "free" land.

This analysis is completely flawed. It assumes people live in their homes up until the foreclosure date. In fact there are currently 19 million vacant homes in the country; this represents 14% of all homes. Besides bank owned homes being vacant, there are second homes that people walked away from and primary homes being foreclosed on that people moved out of because they didn't want to wait to be kicked out. The JP Morgan analysis is trying to paint a picture of people benefiting from the lengthy foreclosure process, the real benefeciary is the banks because they don't have to write down the mortgage, and they get to book phantom interest income until they actually take the home.

I personally know someone who has been in default on three houses for over 2 years. He moved out of his primary house and is now renting out all three. The lawyer representing him against BoA is getting a cut of the vig, of course.

If you have access to it, the number of short sales that are still occupied would be the best indicator of "squatters".

In Las Vegas, the heart of the housing bubble, here is breakdown of our invetory:

27,106 properties on the market, broken down as follows (sold in the past 30 days-3,816, therefore 7 months inventory):

5,558 REO (Bank owned) vacant and already foreclosed upon

15,338 Short Sales, of which 5,025 are vacant and the rest occupied by "squatters" who have stopped paying the mortgage and are living free.

Las Vegas is one of the worst case scenario markets, and with the average property having fallen at least 60% from the peak in 2006, anyone who purchased after 2000 or refinanced and took out their equity, is under water.

Strategic defaults are plentiful as are hardship defaults due to the 14% unemployment. If prices bottomed today and went back to a historic 3-5% annual appreciation rate, it would take over 20 years for values to return to peak levels.

When it is possible to rent the same house accross the street for half of one's mortgage payment, the temptation to default and live for free for a least a year, and then rent for half of what the mortgage payment was, is too great for many to pass up.

Got to love the American Chimereconomirage. Nothing is what it seems. Things don't just add up. Mark to something, god knows what.

And all the ethical dilemmas that come up with pay or no pay or go to jail or get out of jail free.

For the world's sake it should end sooner. Unfortunately, it's ending later. Too late. Th epox is everywhere. India's RE biz is being taken over by Jones Long and ReMax, retail by son to be walmart and tepcos and whatever.

The New World Order is not about freedom, more like a global slave system. The fight against it needs to take place now (and they will come for your gold, silver and guns). Think FEMA death camps for "freedom loving patriots".

Since direct Federal assistance either goes to bond dealers at Goldman, or Citibank dividends, or building a fucking Chevy Volt..This indirect POMO goes to buying IPADS or whole wheat pizza...meanwhile I have to eat Ellios...ha ha only in America..Free fucking houses for dicks....God help us...Oh..Robo show me some charts on the home builders...CAUSE they are sucking.....short LEN and TOL. actually Ellios are ok,,,well-done

I know a guy that sat in his house for 34 months and never made a payment...he hired a lawyer to continually send stuff to his bank to delay/draw out the foreclosure process....34 MONTHS, rent free....he finally left last month...unreal....

This Great Depression apparently has been quite the boon for the broader economy and industry (never you mind the "bad" numbers, like the level of the Federal debt or ongoing deficit, only nerdy, bean counter-types pay attention to those). The Fed remitted record profits to the Treasury. The Treasury made billions upon billions in profits on it's emergency programs. Consumption, 70% of GDP, is being supplemented by dead beat squatters assuaging their deflated self-esteem by buying shit. At this rate everlasting prosperity is but a handful of real estate and financial crises from becoming a reality. Long live the Great Depression and may your next economic crisis be more profitable than your last.

I read this with a smile at the tone. Oh woe, woe for da Bankers! Anytime anyone in a position of power bemoans how the middle class taxpayer in being abused, your BS detector should redline.

My kudos to those of you living mortgage free - whatever your former mortgage was, spend 1/2 that amount on silver. Prepare.

If I was underwater in one of these homes, I'd stop paying my mortgage, and take in renters. I'd plant corn in the front yard and do free-range chickens in back yard. I'd turn the first floor into a whorehouse, the second into a meth lab. Oh, woe, woe unto the bankers! And these evil 'deadbeats' are driving up inflation! See, they are hurting you. Turn them in. Rat them out. BURN THEM OUT!

IMO, if you are underwater and still paying on your mortgage, after all the endemic fraud we've seen, you are an idiot. Remember, one man's freeloading squatter is another's freedom fighter.

You would be the exact opposite of these people...NEVER borrow from THE MAN what you can't pay back. True economic freedom is NOT owing anyone anything..These people will have their turn in the fucking barrel. Bankers never lose..

Sadly, Axe, you are mistaken. While being debt free is great, you in fact own zero. Think you own your house or property? Try not paying your taxes. The real owner will come and take it off you; if you resist you will be shot down like a dog.

Think you own your car? Try again. You need permission to drive it in the form of registration and license. You must keep insurance on it. If you cannot use it without permission, you do not own it.

Do you own the cash in your pocket? Well, let's see - someone else is debasing it by around 10% per year - stealing out of your pocket. So you own the clothes on your back and that is all. Get used to it.

The great thing about us is we cheer patriotically for our own slavery. The best slave is own that doesn't even know it - your Master need not worry with the bother of chasing you down or building a fence to contain you. Your own mind is your prison.

I was a little confused at first ... most any other day the comments are along the lines "don't pay your taxes, don't pay your mortgages, pull your money out of the banks, reject the system, don't participate" (good approach IMO)

Let's not forget that the money the banks 'lent' didn't exist before the mortgage was created. They 'fractional reserved' it out of cyberspace and started charging interest on it.

The currency that was stolen from everyone via this inflation event actually went to all the people who built or supplied materials for the construction and any profit realised by previous landowner - No?

+1 - I'm shocked by the tone of the article and subsequent posts. I thought I was on CNN.com for a minute or two.

If it weren't for corporate greed, we wouldn't be in this mess. Don't loan money to deadbeats and then cry when they renege on their obligation. I don't buy the inflation argument either. The extra 50B is a drop in the bucket when it comes to food/energy. It's artificially pumping corporate profits (read: Apple, Netflix, Applebees), but that's about it.

I might be wrong,(but I doubt it), that from the beginning, minorities, apes, and sheeple were lured by their own greed and lack of due diligence to "buy" into these millions of homes through the concerted effort of George "fuck head" Bush and accomplices, aka. the fucking fraudulent Real Estate brokers, Banksters, and so on. The torched was passed to the ultimate Lib in Hussien "fuck head" Obummer, along with cohorts Ben Shalom Banana and Tim "heister" Gietner. These shit loaded, toxic methane "ASSets" were sliced, diced, and packaged by the the bansters, and then bought by the Fed through Fannie and Freddie where they are NOW=YOURS AND MINE! Why should the GD banks give a fuck if they get the house back OR not. You and I own the fucking things now and forever. Someone should die over this bullshit.............

I find the term "deadbeat" to be about as accurate as the mortgage i signed, where terms and conditions were added after signing. The term "deadbeat is about as accurate as the robo-signed transfers and assignments which are showing up in court. I find the term "deadbeat about as accurate as the lein on my property, which is held by a financial institution disolved in bankruptcy YEARS ago. I find the term "deadbeat", in this case, to be a bunch of crap. For the record i am current on my mortgage

Soon after I stopped paying my mortgage I also stopped charging my renters. I told them what was up and wished them luck. I saved those poor kids thousands of dollars. I have no idea if they are still living there, I hope so because they really loved the place and took great care of it.

Oh so you're the guy they were going on about? I explained to them that I am the new owner of the property and all rent is payable to the British Virgin Islands-based bank I have employed to clear the payments on my real estate empire.

It's funny, I was just thinking about the actual character Tyler Durden, and the sort of things that he did and stood for, and I couldn't help but wonder if you are trying to sell me back my own fat ass with this post.

I have builders who took out construction loans renting these out so that the "tenants" can pay us $950 a month when interest is $1,500+ a month. It's hilarious to see a check come into me for $950 when the back interest due is $10,750.00!!

I have been for 6 months ballparking various possible overstatements of personal consumption expenditures by the amount of monthly mortgage payments not made and RE taxes not paid by "stay-in" defaulting residents who are still working (I know 4 couples who are doing this): average loan of $175k = $1050/mo., plus RE taxes unpaid, call it $250/mo., gives monthly cash to spend of $1300, times 12 months = $15600/yr. spendible, times, say, half of the 14 mil homes in default at 7 mil, equals $109 Billion available to spend in liew of paying PMI and RE taxes, divided by recent PCE 12 month total expenditures of $9.3 Trillion est.

Lots of variables to consider here, but also lots of possible PCE over-estimation, maybe as high as 11%, none of which given any media mention, while any slight PCE bounce is greeted with bravado.

I suspect we won't see the reality of this ongoing, deepening credit collapse, until rioters empty the big-box stores, and BenHubris' wealth-effect is replaced with the anarchy-effect of values of stolen property suddenly sold on the street.

I'm sure my numbers are off by 50%, yet I'm sure any reduced PCE overstatement estimate still reveals the depth of the lies as well as the steep slope of the upcoming credit and spending collapse.

I would have to disagree with the assessment of this article.Based on my personal experience, I haven't paid rent in 9 months due to my deed-in-lieu of foreclosure defaulting landlord who was nice enough to tell me to save my money to move out. I took a trip to Europe for 10k and paid it off. Now I am paying off my auto loan. None of the money I'm saving is going into the economy, it is going to pay off existing debt or debt accumulated in foreign countries. I would suspect that most people who aren't paying their mortgages or rent are paying off debt with the money.

This in turn, causes banks to collect less interest income, reducing their shareholders income, reducing the GDP. Who out there is not paying a mortgage or rent and spending the money?

How fortunate for you. But there are for too many people in this country who are very irresponsible and will blow the money, not pay off a single debt and expect to get money from every social program available.

We have always paid our debts and always plan to. Owing roughly 100k on this crackerbox is a wash. But riddle me this. I bet a banker that the 100k I owe him in toilet paper at 5% over 30 years is a deal on my side. But when this toilet paper heads sharply south(our contract is in dollars), watch how fast he tries to change the rules. Then who's the welsher?

I know for a fact that JP Morgan takes your house in 5-6 months. If they have to evict you after that then add 8 weeks. I don't know who these irresponsible banks are that are letting people stay rent free for over a year. But I know someone who hasn't paid their mortgage in 2 years and the bank has yet to take their house.

And your landlord is one of those stupid fucking idiots. Why didn't he keep collecting the rent to keep for himself instead of paying for your car and trip to Europe. Either he is wealthy enough or a complete dumbass.

The author is entirely wrong. In most places, the people who stay in the home and don't pay the mortgage are still the legal owners, until a foreclosure goes through. They are not in any sense "squatters", though they may be contract breakers.

But contract breaking cannot be made into a privilege of the banksters only. If Blankfien and Dimon don't have to honor their contracts, or get modifications by the government whenever they are losing on one, why should anyone else be held to strict terms?

The struggle to "pay your bills" is futile. We live in a lawless environment. If people on the whole can pay their bills, this just signals those higher up - Wall Street and DC - that they aren't taking enough because the host still breathes.

Honestly, some of you people are very clever but I am surprised at the intellectual impoverishment of this article. The biggest "deadbeat" in the world is Ben Bernanke, but nobody's coming to take his house. It would be more valid to argue that US troops in Iraq and Afghanistan were "squatters" than people who have lived in a house and have title to it, even if they haven't paid some worthless and rapacious bank for some connected agreement.